12-09-2013, 11:53 AM
I've been meaning to do the free trial of FAST graphs. You guys really think it valuable? Whenever I see them used on SA I think to myself that maybe they can be a bit too misleading. But maybe I don't really understand how it works. In the samples, it seems compelling to conclude that a stock is undervalued when the black line is below the orange line, and overvalued when it is above. But isn't the orange line just drawn at an arbitrary 15 times earnings? That is, doesn't it just use a P/E of 15 to evaluate whether all stocks are over or under valued?